How to evaluate housing rent by income method

Income method is a commonly used valuation method when the expected income of rental housing is predictable or determinable. The calculation of annual net income and the selection of rate of return are still the key to evaluate the rental price of houses by income method. Net rental income is rental income minus four taxes: maintenance fee, management fee, insurance fee and tax.

The appraisal object to which the income method applies is the real estate with economic benefits or potential economic benefits. Based on the average rent of the same type of real estate in the surrounding market on the base date, this paper calculates the annual income status of the entrusted real estate during the indicated income period, which can be a fixed annual income quota or an appropriate proportion increase or decrease, and finally calculates the evaluation results.

definition

The essence of income method is to seek the value of the appraised object according to the expected income ability of real estate.

The embryonic form of the income method is the early purchase method, which uses the annual rent of several years (or several times the annual income of land) to express the value of land.

The income method in enterprise value evaluation refers to the evaluation idea of determining the value of the appraised object by capitalizing or discounting the expected income of the appraised enterprise.

Two concrete methods commonly used in income method are income capitalization method and future income discount method.